Failing at Health Reform: The Critical Importance of Both Motivation and Execution

Around the country, for every health system that is successfully navigating the early years of value-based healthcare, there are several
others that are failing– even though many don’t yet realize it. These failing organizations can’t or won’t restructure themselves to deliver effective, efficient and affordable care.

I’ve come to the conclusion, after observing struggling systems, that two basic characteristics are necessary for systems to transform themselves in response to external pressures: these are execution and motivation. Successful systems have both of these characteristics in spades: failing systems suffer from an absence of one or both.

I refer to motivation as a system’s willingness to change: to recognize the need for transformation in the face of external pressures and to move with a sense of urgency.

Execution, on the other hand, is the healthsystem’s ability to get stuff done. It describes how good a company is at setting priorities and accomplishing what it sets out to do. Systems that execute well complete important tasks. Those that execute poorly (or execute the wrong things) stagnate, flailing as they try to get unstuck.

You can plot these two characteristics as a grid.

Healthsystem Responses to Healthcare Reform: Successful Systems Benefit From High Motivation and Ability to Execute. Failing Systems Fall Into Three Distinct Outlier Quadrants

Successful systems sit higher than average on both of these two characteristics. These are systems that understand the need for change, are deliberative and thoughtful about planning strategies/ partnerships, and don’t waste time on unimportant work. They know how to prioritize. When they do decide to implement change, their execution is flawless.

On the other hand, systems that struggle with motivation or execution sit, I think, in three distinct outlying quadrants:

1) “The Whistlers at the Graveyard” (low in motivation, strong in execution). These are generally systems that are doing well in their daily operations, but are unable to meaningfully embrace long term change. Things are “fine” as they are. Usually these are well reimbursed mega-systems with strong physician cultures. They resist risk contracts and the development of ambulatory or lower-cost service lines because they feel that they have their geographic markets cornered– and can leverage payers to maintain the status quo. Their strategy is to kick the can down the road despite worrisome trends such in the insurance market such as high deductible and employer to worker subsidies.

2) “The Too-Little-Too-Lates” (low in motivation, poor at execution) These are often academic medical centers or safety net hospital systems that are paralyzed by infighting and bureaucratic overhead. They are unable to align their missions and struggle to improve care, access and customer satisfaction. They look at health reform as an abstract concern but feel reassured that regardless of what happens, they are too big or important to fail and that they will get a break due to the difficult patients that they serve. These systems are often filled by demotivated staff who regularly launch initiatives that go nowhere.

3) “The Wheeler-Dealers” (high in motivation, poor at execution) These are usually systems that are very concerned about health reform but areare not large or wealthy enough to build the infrastructure and analytics they need to manage risk. They ultimately spend a lot of time purchasing one-off services from healthcare IT/ analytics vendors, cobbling together various back-office components and making deals with independent physicians. They are on the razors edge when it comes to keeping an adequately sized risk-pool of patients. Their Achilles heel is the amount of time they spend on small deals rather than the large affiliations that would lead to meaningful progress.

It will be interesting to see how these three outlier groups fare over the next several years. We’ve already begun witnessing a range of mergers and acquisitions, many fueled by outlying quadrant groups integrating with more capable systems. This trend may only grow with time.

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“Managing capitation can be deceiving. Like flying an airliner, the gauges, levers and controls can make it seem like high-stakes science. It is, partly. But as with all things healthcare this is ultimately about humans, their needs and their behaviors. You eventually learn that managing the payment model is as much an art as is the actual practice of medicine”.